Report: Teacher fund lax on anti-spiking efforts

SACRAMENTO, Calif. (AP) — A new report released Wednesday by the state controller's office found that the nation's largest teacher pension fund has been so lax about detecting pension spiking at California school districts that it is on pace to audit each district once every 48 years.

The office found that the California State Teachers' Retirement System failed to adequately audit school districts, missed opportunities to stop unjustified salary increases, and failed to use its own electronic system to detect possible abuses.

Besides the slow pace of auditing 1,900 districts and offices, the report found in a sampling of districts that they often lacked transparency or documentation to justify pay increases.

For example, the San Francisco Unified School District wasn't able to explain why one executive received a 26 percent pay increase six months before retirement and another received a 20 percent increase a year before retirement. And officials at the San Diego Unified School District said supporting papers were missing from their files.

The pension fund also failed to review its own data that was designed to prevent pension spiking.

"Starting with more rigorous auditing and better use of existing technology, CalSTRS must fortify its ability and resolve to crack down on those seeking unjust enrichment at the expense of their fellow educators and taxpayers," Controller John Chiang said in announcing the results of the review.

CalSTRS' chief executive Jack Ehnes agreed that the $152 billion pension system should improve oversight and says the system is taking steps to improve pension calculations, including forming a special task force, forming a compensation review unit and setting up a toll-free hotline.

According to CalSTRS, the compensation review unit has identified 270 suspected instances of spiking, investigated 175 cases and confirmed 28 instances of inappropriate benefit enhancement. More than 75 tips have been received through the pension abuse reporting hotline.

"CalSTRS takes pension spiking very seriously and places a high priority on improving processes to reduce the likelihood of pension abuse attempts," Ehnes said in response to the report. "CalSTRS agrees with the controller's recommendations and will take additional actions to further strengthen its controls."

He said many of the report's recommendations have been adopted within the past year.

The pension fund includes more than 850,000 teachers, administrators and retirees, and currently has a long-term unfunded liability of $64.5 billion.

The review came just days after Democratic lawmakers passed a pension bill that included anti-spiking measures and a retirement cap for new employees. The Associated Press also reported this week that for nearly a decade, California's top-paid school administrators got to collect six-figure lump sum cash payments in addition to their pensions.

According to the AP's analysis, approximately 180 participating retirees receiving $100,000 or more a year inpensions took home an average additional lump-sum payment of $147,000 in addition to a reduced pensionwhen they retired between 2002 and 2010. The program was intended to help retain and recruit teachersduring the dot-com boom.